3
2
1
12.3 A general framework for combining aid modalities
Based on the above, and noting that all solutions are ultimately context specific, it is possible to advance a general framework to combine different aid modalities to support DLGTD.
The starting point is to recognise that ‘Decentralization policy is a moving target at both a de jure and a de facto level’ (Smoke and Winters, 2011, p. 8). Because of their changing political drivers and of the intra-governmental tensions they generate, decentralisation reforms are often incomplete and subject to reversal. Moreover, the national policies underlying them are typically both not well defined and continuously evolving. This lack of policy definition and stability may be seen as both a threat and an opportunity. On the one hand, it may make it difficult for donors to align with a DLGTD policy whose objectives are unclear or that contra-dict other sector policies; on the other hand, it may provide critical space for external aid to contribute to DLGTD policy definition and development (Romeo, 2012).
Taking into account the often partial and evolving nature of the national commitment to decentralisation reforms, it is appropriate in DLGTD interventions to distinguish between:
■ support to national DLGTD policy implementation;
■ support to national DLGTD policy development and innovation.
These two processes may call for different aid modalities and would benefit from being viewed as both distinct and connected (see Figure 12.3).
F I G U R E 1 2 . 3 Support to policy development and institutional innovation
Direct impact Learning feedback Capacity influence FINANCIAL TRANSFERS
(Budget support/other modalities) Support to
national policy implementation
Policy imple-mentation
issues
Policy and institutional development
issues COMPLEMENTARy
MEASURES
(Project and other modalities) Support to policy
development and institutional innovation
EXTERNAL AID Strategic (forward-thinking) feedback
Auditing (backward-looking) feedback
Policy Institutions POLICy
DIALOGUE
Transfer for capacity development
Issue-driven policy and institutional development/
experimentation
Transfer for development
spending
Goals
Agents Outcomes
S u p p o r t i n g n a t i o n a l p o l i c y i m p l e m e n t a t i o n i n l i n e w i t h t o p - d o w n p o l i c y d y n a m i c s
Supporting the implementation of an existing and sufficiently credible national DLGTD policy is often best accomplished through a budget support operation with its attendant package of financial transfers, capacity development and policy dialogue.
■ Financial transfers. These transfers may expand the fiscal space of the partner gov-ernment and enable it to channel increased resources to LA and other front-line service delivery agents.
■ Capacity development. This may address system-wide issues that constrain effective implementation of the agreed policy and — beyond building the technical skills of individual agents — enhance the institutional environment within which such agents operate and strengthen the capacity of the agency leading DLGTD policy formulation and implementation.
■ Policy dialogue. This dialogue will assess development results and expected outcomes against the performance assessment framework (PAF).
S u p p o r t i n g n a t i o n a l p o l i c y d e v e l o p m e n t a n d i n n o v a t i o n i n l i n e w i t h b o t t o m - u p p o l i c y d y n a m i c s
All the above may effectively contribute to the implementation of the agreed policy.
Disbursement conditionalities may create incentives for (i) translating the national DLGTD policy into detailed and implementable programmes; (ii) adopting greater discipline in mon-itoring such programmes and learning from them; or (iii) securing, through the involvement of the finance ministry, better sustainability prospects for the DLGTD policy.
In many cases, assessment of development results and expected outcomes against the PAF may reveal issues not only of implementation, but also limitations of the agreed policy itself and corresponding deeper institutional problems. Systemic constraints of the policy and insti-tutional environment are often the root cause. DLGTD interventions should help identifying these constraints and in providing a framework for addressing them.
Don’t fall into the trap of ascribing implementation issues and limited results to limited capacities of front-line service delivery agents. Look at
institutional and policy constraints as well.
Tackling these wider policy and institutional issues calls for a policy dialogue of a more strategic and forward-looking nature, instead of the operational dialogue associated with budget support. Experience unequivocally demonstrates that attempts to use disbursement conditionalities to induce governance reforms are not bound to succeed beyond perhaps some formal improvements in public financial management systems. It is also unlikely that they will deepen the national commitment to place-based policymaking or can be relied upon to induce fundamental changes in the sub-national system of governance and public administration.
Consequently, consideration should be given to a second stream of aid, one that explicitly focuses on supporting national policy development and institutional innovation from the
bottom up. Project approaches would be well used to support selected issue-driven oper-ations that foster local experimentation of scalable institutional innovoper-ations first to make the most of existing policy frameworks and then to demonstrate the need, and build the constituency, for further policy reform.
This second aid stream should not be confused with the one focusing on policy implemen-tation. If sustainable results are to be achieved, a safe space should be created where inno-vative policy and institutional solutions can be experimented with locally, with external aid bearing the costs of experimentation and acting as catalyst of local collective action(8). In practice, EU delegation support to DLGTD stands to benefit from this dual track. The lessons learnt in the experimental work could be combined with those emerging from the agreed policy implementation and related budget support operation. Both sources would feed into a more realistic and strategic policy dialogue and contribute to feasible and incremental policy reforms from the bottom up.
With this framework in mind, Part IV looks at the various aid modalities and financing mech-anisms the EU can activate to help implement and/or develop national policies for improved DLGTD.
(8) The term ‘safe space’ is here used in a double sense. First, in line with Andrews, Pritchett and Woolcock and their advocacy of a problem-driven iterative adaptation approach to aid, which is meant to designate ‘an authoriz-ing environment for decision-makauthoriz-ing that encourages positive deviance and experimentation (as opposed to designing projects and programs and then requiring agents to implement them exactly as designed)’ (Andrews, Pritchett and Woolcock, 2012, abstract). Second, stressing the importance of distinguishing between opera-tional and strategic policy dialogue, it is meant to underline the importance of keeping a spirit of true partner-ship, free from the pressures of the pre-defined indicators and targets of a budget support–related PAF.